What changed
Budget 2026-27 replaced the earlier IT safe harbours with one 15.5% operating margin on cost for software development, ITeS, KPO and contract R&D. The eligibility threshold rose from ₹300 crore to ₹2,000 crore, approval is automated and the option can run for five years. Unilateral APAs for IT services are to be fast-tracked, aiming to conclude within two years.
Who it affects
GCCs and captive service centres charging a parent on a cost-plus basis.
What to do
Compare your current margin with 15.5%. Routine cost-plus centres may opt in; centres doing higher-value R&D or AI work should benchmark annually or consider an APA.